- September 6, 2023
- Posted by: [email protected]
- Category:
In a surprising turn of events, Bitcoin has defied prevailing market trends, standing resilient as crypto investment funds experienced a streak of outflows totaling $342 million over the past seven weeks. Despite this bearish sentiment dominating the crypto-backed investment fund sector, there are intriguing developments in the market worth exploring.
Last week marked the third consecutive week of minor outflows from crypto-backed investment funds, amounting to $11.2 million in total. These outflows were primarily driven by significant withdrawals from altcoin-backed funds, with particular focus on those linked to Polygon’s native token, MATIC, as reported by crypto investment and research firm CoinShares.
According to CoinShares data, MATIC-backed funds bore the brunt of these outflows, losing a substantial $8.6 million, constituting the majority of the “other” category in their report. Ethereum (ETH) funds also faced net withdrawals, totaling $3.2 million, reflecting a degree of investor caution.
Additionally, short-Bitcoin funds, which thrive when Bitcoin’s price declines, witnessed outflows of $3.3 million. This suggests that bearish speculators are gradually opting to secure profits amid the ongoing market uncertainty.
In contrast, Bitcoin (BTC) continues to stand as a beacon of stability. BTC-backed funds experienced inflows of $3.8 million for the week, signifying bullish sentiment among Bitcoin investors. This represents a remarkable shift from the previous week, which saw Bitcoin funds experience outflows exceeding $149 million, and the week before, when Bitcoin outflows reached $42 million.
Despite the persistent outflows from crypto funds, the market saw an increase in trading volumes, with a weekly total of $2.8 billion. This figure stands at a remarkable 90% above the year-to-date average, hinting at growing interest in the crypto space, potentially driven by the ongoing anticipation surrounding a spot Bitcoin exchange-traded fund (ETF).
James Butterfill, an analyst at CoinShares, commented on the weekly flows, suggesting that the inflows into Bitcoin funds could be indicative of shifting sentiment. He noted that “year-to-date digital asset investment products remain in a net inflow position,” emphasizing the roller-coaster nature of investor sentiment, often swayed by regulatory concerns and hopes in the digital asset space.
He added, “Last week exemplified this, beginning the week, investors had high hopes for a spot ETF approval in the US, only to be quashed by the announcement of a delay for all other spot ETF applications.”
While crypto funds have witnessed a prolonged outflow streak, Bitcoin’s resilience and the heightened trading volumes signal a dynamic and uncertain market environment driven by both regulatory expectations and investor sentiment.
